Kimberly-Clark Streamlines Operations with Restructuring Plan and Cost Savings Efforts

Kimberly-Clark announces business reorganization, expects $1.5 billion in costs

Kimberly-Clark, the well-known Kleenex tissue maker, has announced that it will be undergoing a major restructuring in an effort to streamline operations and reduce costs. The Irving, Texas-based consumer goods manufacturer is expected to incur about $1.5 billion in related expenses over the next three years, with cash costs accounting for approximately half of that amount. Although the exact number of jobs to be cut was not disclosed, it is clear that workforce reductions will be a significant part of these costs.

This restructuring comes at a time when Kimberly-Clark is facing declining sales due to inflation-stricken customers opting for more affordable alternatives and challenges from private-label products taking up valuable shelf space at retailers. The company’s international personal care segment and family care and professional businesses will now form two of its reorganized segments, while its North American business will remain as it was. Previously, Kimberly-Clark had three business segments, each with three geographic subdivisions.

In addition to cost savings, Kimberly-Clark’s supply chain modernization plans aim to generate over $3 billion in gross productivity and $500 million in working capital savings that can be used for growth investments. The company expects to complete its transition to the new organizational structure by the end of 2024 and projects that these actions will result in approximately $200 million in selling, general, and administrative savings over the next few years.

Despite some challenges facing the industry, Kimberly-Clark has reaffirmed its annual organic net sales and adjusted profit targets provided earlier this year. In January, the company fell short of fourth-quarter sales and profit estimates but cautioned that weak retail inventories could result in flat volumes in the first quarter. As a result of this announcement, Kimberly-Clark’s shares were up 1.5% before the market opened.

Leave a Reply